MGM’s attempts to monopolise the Las Vegas strip took another step closer to fruition yesterday when it was revealed that the brand has acquired popular casino and hotel resort The Cosmopolitan.
They will fork out a cool $5.6 billion for the property, which will be relinquished to them by the private equity firm outfit Blackstone.
It’s not a straightforward acquisition, mind you. MGM actually plan to rent The Cosmopolitan from Blackstone on an annual basis, splashing $200 million in rent per annum for a lease that will run for 30 years. The agreement will also see a 2% increase in that rental fee year on year.
As reported in the Wall Street Journal, that return makes this Blackstone’s most profitable investment and sale of a single asset in the firm’s history. They purchased the premises from Deutsche Bank back in 2014 for $1.8 billion, committing to a host of renovations that included the build of 3,000 more rooms, the addition of luxury suites and the construction of new hospitality facilities that cost a cool $500 million.
The deal takes MGM’s real estate empire to 31 hotels and casinos, with ten of those on the Las Vegas strip alone. They have also just been announced as a major licensee in Japan, and will operate a resort in Osaka – the first legal casino in the city. Naturally, CEO Bill Hornbuckle is in a bullish mood.
“The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences,” he said.
“It’s an ideal fit with our portfolio and in furthering our vision to be the world’s premier gaming entertainment company.”
Whether that world domination is realised remains to be seen, but MGM are certainly doing a grand job of taking over Vegas already….
Who Controls the Las Vegas Strip?
At the time of writing, and not including the three properties that are currently being constructed, there are 29 significant casinos on the Las Vegas Strip.
But who runs Sin City these days? Here’s a quick look at who owns the most casinos on the Las Vegas strip:
| Operator | No. of Casinos | % of Strip |
|---|---|---|
| MGM | 10 | 35% |
| Caesars | 8 | 29% |
| Phil Ruffin | 2 | 7% |
| Apollo Global | 2 | 7% |
| Wynn Resorts | 2 | 7% |
| Meruelo Group | 1 | 3% |
| Penn National | 1 | 3% |
| Tom Elardi | 1 | 3% |
| Golden Ent | 1 | 3% |
| Genting | 1 | 3% |
As you can see, MGM and Caesars Entertainment have a near monopoly on the Las Vegas strip between them, controlling more than 50% of the casinos founds on the famous runway.
MGM’s acquisition of The Cosmopolitan makes them the clear number one as far as ‘running’ the strip is concerned. That property adds to their already impressive collection which includes MGM Grand, The Mirage, the Bellagio and Mandalay Bay.
You wonder what Caesars Entertainment have up their collective sleeve to equal that tally. They have eight properties on the strip, including Caesars Palace, Bally’s and Planet Hollywood.
Wynn Resorts operates their eponymous Wynns and Encore, while Apollo Global have taken over the running of the two former Las Vegas Sands, The Venetian and The Palazzo, after they decided to step away from Sin City.
Phil Ruffin, Alex Meruelo and Tom Elardi are entrepreneurs who operate Circus Circus, Sahara and the Best Western respectively, while Penn National Gaming’s sole property is Tropicana.
Genting are the most recent addition to the strip, finally opening in June 2021 after a catalogue of delays.
What are the Most Expensive Las Vegas Casino Deals?
It won’t surprise you to learn that at $5.6 billion, the deal between MGM and Blackstone for The Cosmopolitan is believed to be the most expensive in Las Vegas history.
It’s hard to put an exact monetary figure on some of MGM’s deals because they tend to go for leasing agreements over outright purchases – they have a similar contract in place with Blackstone for the Bellagio, which it pays an estimated $245 million in annual rent for.
Curiously, MGM did once sell the MGM Grand and Mandalay Bay to Blackstone for $4.6 billion, and that joint venture is still ongoing to this day.
Las Vegas Sands doubled down on their properties, accepting a bid of $6.25 billion from Apollo Global Management for both The Venetian and the Palazzo.